Financing Agricultural Value Chain RDE: An Alternative Approach with Examples from the Red Meat Industry

Agricultural RD&E managers have responded to the increased focus on value chains in food and agricultural product markets and most Australian agricultural RD&E corporations now have value chain programs embedded in their portfolios of funded projects. As community concerns have intensified within the social, environmental and public health spheres, the agricultural RD&E corporations also have started to invest some resources in areas of research which have externality implications. However, the assessment processes they use typically have not kept up with these changes, and some are questioning the basis of the current approaches when whole-of-chain and externality issues are important considerations. In this paper, the idea that agricultural value chain RD&E results in ‘chain goods’ is linked with Swann’s idea of a ‘club goods solution’ to research funding, to argue that a ‘chain goods solution’ can be a viable means of funding research activity that relates to agricultural value chains. Thus, members of a value chain need not rely solely on government to fund value chain RD&E. A set of criteria is suggested to determine who should fund RD&E activities in Australian agricultural value chains depending on the relative balance between expected private, chain and social benefits.